The State of International Mailing and Shipping

November 2015

The State of International Mailing and Shipping A Primer for America’s Small Business Owners

The State of International Mailing and Shipping

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CONTENT

3International Mailing and Shipping is a Lucrative, But Complicated, Business

3Maximize the Options, Minimize the Expense

4The Answer is de minimus

4What is a de minimis Value?

4The Land Down Under

4Beware of Regulations on Imports

5Avoid Potential Headaches

5Never Assume

5Information Resources

5DIY Search

5North of the Border

5Low-Value Clearance

6Duties and Taxes

6Non-Resident Importer Program

6NAFTA Certificate of Origin

6Buyers’ Expectations and Demands

7The Size of the Market

7Canada Is a Good Example

7Keep International Returns Simple and Keep Customers Happy

7Make the Season Bright

7Growth Opportunities

8Short-Term Prognosis

8Four International Shipping Activities to Expect

8The Lesson for U.S. Mailers and Shippers

9International Mail Information Resources


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Maximize the Options, Minimize the Expense There are many areas that every shipping customer and shipping service vendor should understand to maximize the options and minimize the expense of international shipping. Some of the newer ones include:

1. B2C and C2C Growth The growth in B2C and C2C commerce has stimulated an appreciable change in international shipping trends. That expansion has, in turn, changed physical package characteristics and revved-up service demand. The effects are easy to see: shipments are becoming lighter, price-sensitivity is proliferating, small/medium enterprise shipping has risen and single-carrier vs. multi-carrier options have grown fast.

2. Demand By Weight The international shipping landscape has shifted because of a change in U.S. air export demand by weight. Since 2005, the 21-70 lb.-package category has decreased in popularity by 3.9 percent. Similarly, the 3-20 lb.-package category has declined by 5.9 percent1.

In contrast, the less-than-three-lb.-package category has grown a whopping 23 percent from 21.7 percent in 2005 to 44.7 percent in 20131.

There has also been a shift in U.S. air export service level changes from 2005 to 2013. The popularity of one-to-two-

day service has fallen from 52 percent to 33 percent while three-plus-day service has increased from 47 percent to 66 percent1. These stats clearly show that consumers and businesses are willing to wait a few days before receiving their shipments.

3. Small-Business Clout The shift from single-carrier to multi-carrier international shipping options accelerates every year. There are four chief market changes attributable to small businesses increasing their presence in the export-package market:

Developed economies are investing in infrastructure and other business-boosting benefits to capitalize on B2C eCommerce growth.

Cost pressures are forcing competitors to look for ways to improve profitability.

Cost management is becoming increasingly influential in determining customers served, contract discounts and rate changes.

Consolidators and re-mailers have become a market force offering shipping options that undercut postal services and commercial carriers around the world on price alone. These consolidators and re-mailers, however, seldom compete on service.

International Mailing and Shipping is a Lucrative, But Complicated, BusinessToday’s shipping environment is complex. That’s no secret. That complexity has created more competition. That’s good news for international shippers. Today’s globalized business and consumer markets – especially the burgeoning shipping opportunities created by the red-hot eCommerce sector – demand that shippers have the information, resources and tools essential for doing business in every region, every country and every location around the world.

Global eCommerce presents a vast and lucrative opportunity for on-line retailers to grow their international business. Conventional wisdom among international mail experts says that cross-border eCommerce could grow more than 190 percent1 during the next four years and the number of shoppers across the globe could increase as much as 40 percent1.

More and more shoppers outside the U.S. want to purchase from American-based businesses for all the reasons we know that make these retailers attractive to the rest of the world: the style and quality of goods they offer, competitive prices, vast selection options, frequent bargains and this country’s unerring devotion to excellent customer service.

That rising level of foreign consumer interest signals two courses of action U.S. business who what to grow must follow: 1) establish and adhere to an international mailing and shipping strategy and 2) spend the same amount of time building a positive customer experience that provides a simple and painless delivery and return event.

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The Answer is de minimusMany businesses shy away from utilizing a postal option when sending international mail and parcels. Fear of potential duties and taxes or uncertainty about mail and parcels being held or returned cause the most anxiety.

Complicating this problem is the fact that few international mail entities have the ability to collect duties and taxes from the initial sender or recipient. This wrinkle could result in an unpleasant after-the-fact bill from a destination country’s customs authority to a recipient many months after a shipment has been delivered.

This possibility poses a particular problem for eCommerce and catalogue retailers who have to balance the use of a mail service to keep international shipping cost low with the desire to offer end-customers a secure and efficient experience free of post facto billing.

With these caveats in mind, the best solution is to focus on countries with a high de minimis value.

What is a de minimis Value? For U.S. export purposes (and inbound country import), a de minimis value is a threshold amount at which mailers can import into a country without having to pay a duty or tax. Although there are exceptions to this rule on certain items – textiles are generally problematic for export regardless of value – countries with a high de minimis value are excellent candidates to consider when sending parcels or mail internationally.

The Land Down UnderAustralia is the best example of a country where the de minimis values are high; it’s an excellent “test market” for mailers who wish to start sending mail and parcels internationally.

Currently, the Australian de minimis value is $1,000 AUD (Australian Dollars). The value of typical U.S. export mail or parcel shipments falls far less than this amount, which makes Australia a great market.

Other markets with a high de minimis value include:

New Zealand: $400 NZD (New Zealand Dollars)

Honduras: $500

Ecuador: $400

Singapore: $400 SGD (Singapore Dollars)

Dominican Republic, Peru, Panama and Uruguay: $200

Beware of Regulations on ImportsThe fact that these markets have high de minimis values does not automatically mean it is easy to send mail or parcels from the U.S. It is important to know the types of shipments that have restrictions on importation. Restrictions may include the amount an individual can import into a country in a year or an outright ban on the item being mailed.

In general, these categories tend to fall outside the de minimis and may be difficult, if not illegal, to send using an international mail service:

Jewelry

Textiles, especially in countries known for exporting them (i.e. wool in Australia and New Zealand)

Alcohol

Tobacco

Lottery tickets or gambling-related items

Medication and pharmaceuticals

High-value electronics

Used or refurbished items

Literature and printed material featuring political points of view

One of the most exasperating aspects of international mailing and shipping for U.S.-based companies is that customers cannot send anything anywhere. Certain restrictions apply, as they say in the fine print of many business offers. Local protectionism for domestic industries, political considerations, the threat of disease or pre-empting potentially illegal activities are just a few of the plausible reasons certain items cannot be freely shipped or mailed.

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Avoid Potential Headaches For reasons Americans may not fully appreciate, horror comic books, unpopped popcorn and blue ice (the airplane lavatory byproduct) create a cornucopia of intrinsic headaches for domestic mailers and shippers. This list of some of the more unusual prohibited items (at the time of this writing) for importation into certain key trading markets will be helpful to every U.S.-based mailer and shipper. A partial roster, by country, includes:

Australia: flammable nightwear, pine cones, unpopped popcorn and honey

Canada: switchblade knives

China: matches, play money, collectible coins and stamps, blue ice, printed materials and literature considered political by nature

France: Internet modems for personal use, chocolate, vitamins

United Kingdom: horror comic books and material for printing them, eggs, dried meat and jerky-style products, foreign-prison-made goods, soil and straw

Never AssumeThese details are important to U.S. mailers and shippers for the simple fact that many items commonly shipped within the United States are prohibited for importation into other countries. Failure to comply with this concept could result in delayed or returned shipments, fines and penalties and even a personal ban on importation into a market by a foreign customs authority. Never assume that you can mail or ship items overseas because they can be mailed or shipped in the U.S., even for items that you might consider benign in nature. The key question: How do you know if your item is prohibited or restricted?

Information ResourcesThere are plenty of resources that can tell you if you can send an unsigned credit card from the U.S. to India (you can’t) as well as other specific and necessary pieces of mailing and shipping information. Consult with a licensed customhouse broker to determine if you can send an item to a particular country or if there is a limit on the quantity. If there is a quantity restriction, a broker might be able to petition a customs authority or consulate for the right documentation and recipient vetting so the item can be imported.

DIY SearchThere is also a self-help solution. Take advantage of the free or low-cost resources available through the Department of

Commerce (www.export.gov), the International Trade Administration (www.trade.gov) and U.S. Customs and Border Protection (www.cbp.gov). All three of these information sources provide extensive expertise on exporting from the U.S.

North of the BorderCanada is the United States’ second largest trading partner. (China is first.) Geographic proximity, as well as product preferences and consumer tastes that closely parallel those in America make our neighbor to the north an attractive market for U.S. shippers and mailers.

The North American Free Trade Agreement (NAFTA) adds an attractive perspective as well. NAFTA has made commerce between our two countries easier, and more lucrative, than at any time in history. Nevertheless, there are some important details that mailers and shippers should heed when sending items to Canada.

Low-Value ClearanceCanada allows goods valued less than $2,500 CAN (Canadian dollars) to be imported for expedited release as long as goods are for personal use and not intended for resale or other commercial uses. The resulting benefit of this simplified clearance process is a faster transit time from sender to recipient.

The company handling the shipment – a courier, postal authority or customs broker – must be enrolled in the

Helpful Tip International mailing and shipping rules and regulations can – and do – change often. You are responsible for keeping current on prohibitions and restrictions if you want to mail or ship successfully overseas.

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Canadian Courier Low-Value Shipment Program to participate in this program.

Prohibited and regulated goods, such as tobacco, firearms, pharmaceuticals and controlled substances, are not included in this program regardless of shipment value.

Duties and TaxesYes, Canada’s Low-Value Shipment Program allows qualifying shipments to be cleared easily. Be aware, however, that it does not exempt the sender or recipient from applicable duties and taxes. Shippers must work with a courier or mail partner who has a brokerage-inclusive shipping product and the ability to receive the duties and taxes as a bill from the carrier or to pay Canadian customs directly.

The best example of this is an air courier shipment in which the courier acts as the customs broker. Two consequences could occur if shippers do not utilize this type of service. Shipments could be held by customs. It’s also possible that shippers or recipients could receive a duty bill from Canadian customs as many as nine months after a shipment is delivered.

Non-Resident Importer ProgramThis popular program for parcel shippers and mailers, especially those in business-to-consumer eCommerce, allows them to work directly with Canadian authorities and establish, in essence, a proxy. This stand-in status bestows the benefit of being treated like a Canadian business. One of the major benefits is the authorization to pay duties and taxes directly to Canadian authorities, thus avoiding unanticipated, after-the-fact bills for shippers, mailers or their customers. This option is especially popular for commercial entities who wish to sell products to customers utilizing a “fully landed cost,” in other words, including Canadian duties and taxes in product price quotes.

The Non-Resident Importer Program also allows the sender to utilize a mailing option because the duties and taxes ultimately revert back to the original sender.

Shippers and mailers in the program may also be eligible for preferential duty rates and rebates associated with Canada’s Goods and Services tax.

A licensed customhouse broker can help U.S. shippers and mailers set up the Non-Resident Importer Program, which requires obtaining a Canadian business ID number, a Goods and Services tax registration number and an import/export number.

NAFTA Certificate of OriginThe North American free-trade zone, the largest free-trade area on Earth, accounts for more than a quarter of the world’s total gross domestic product. Many duties and taxes have been reduced or eliminated thanks to the North American Free Trade Agreement. Goods manufactured within the NAFTA region, however, need a NAFTA certificate of origin to qualify for those duty and tax benefits. A certificate of origin may be used for a single importation of a product or multiple importations of identical ones. A certificate of origin (available in most shipping-related software) must be completed and signed by the exporter of the shipment.

By understanding the Canadian Low-Value Import Program, Non-Resident Importer Program and the NAFTA certificate of origin, U.S. parcel shippers and mailers can potentially expand their business opportunities to more than 34 million new customers. Knowledge is the key to success in this situation.

Buyers’ Expectations and DemandsAs previously stated, the growth in eCommerce has opened new markets to U.S. retailers all over the world. As those international opportunities increase, so do foreign buyers’ expectations. Online shoppers – the recipients of international parcels and packages – are shifting their buying habits. In fact, they are trending toward smaller, more frequent, lighter-weight shipments delivered directly to their homes or other convenient pick-up locations and demanding flexible shipping options.

That last point is particularly significant because consumers outside the U.S. are generally responsible for selecting a carrier for an international return and covering the associated cost. This predictable boom in cross-border eCommerce will fuel the need for easy-to-use and inexpensive returns protocol. A full-circle retail strategy serves businesses well; exceptional customer service for returns can be equally, if not more, important than delivery.

Shipping to Canada Shippers and mailers can find basic information about Canadian commerce at www.export.gov. For answers to specific questions, consult a licensed customhouse broker with special expertise in Canadian shipping and mailing regulations.


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The Size of the MarketThe Atlanta-based Colography Group, a research and consulting firm specializing in market intelligence for multinational shippers, discovered several fundamental facts that define international consumers and the size of the international market for mailed returns to the U.S., including:

Customers outside the U.S. carefully consider a U.S. merchant’s return policy prior to purchasing.

Nearly 8.5 million packages are returned each year to U.S. air export shippers. That is almost five percent of U.S. air export shipments in the less-than-70-pounds category.

Among the different Colography-identified international mail returns segment – mail order/etail, retail, telecom, manufacturing, wholesale and other industries – returns were most common in the manufacturing and wholesale segments.

Canada Is a Good ExampleIn a separate study, Colography explored how returns and return policies affect the purchasing behavior of Canadian consumers. Survey data of Canadians revealed that approximately one of every four active online consumers returned an item purchased within the previous 12 months. Almost three of every four Canadian consumers stated that a retailer’s returns policy influenced their decision to purchase from a particular merchant.

The behavior of Canadians coincides with the global landscape of international returns. Many buyers will drop an etailer in order to find one that offers the customer service they expect. Further, three out of four buyers make their purchase decision based on tracking services offered (email or text notifications, etc.) – for both delivery and returns.

Keep International Returns Simple and Keep Customers Happy Shipping costs on returns is a noted point of contention for customers. In fact, the most common complaint from customers is paying for return shipments. Companies that seek carrier agreements that include return options differentiate themselves and create a competitive advantage, resulting in increased favor among customers who appreciate the flexibility.

Make the Season BrightGlobal shipping takes on unique characteristics during the holiday season. Despite the upturn in per-piece volume, risks to the global outlook still prevail. Those risks include:

Emerging economies’ near-term growth being softened by low commodity prices and waning consumer demand in China

A bumpy transition of the China growth model from export to domestic demand

Economic pressure from geopolitical tensions

Growth OpportunitiesThat said, there are still growth opportunities for the shipping carrier industry.

Take a close look at the 2015 holiday season. U.S. retail sales grew 12 percent to 13 percent compared with 14.4 percent in 20141. Some of this was caused by the proliferation of periodic non-holiday sales events in 2015’s third quarter which affected traditional holiday spending.

Evidence of this transition from “holiday season” to periodic shopping events can be found in Australia’s Click Frenzy which saw a 27.7 percent grow in sales in November 2014 vs. 20131. Amazon Prime Day on July 15, 2015, was global and open to all Prime members as well as new customers who signed up for 30-day trial memberships. These and other similar events will, most likely, be repeated and expanded to include other dates prior to the traditional holiday shopping season.

Another manifestation of this periodic retailer shopping events phenomenon is the online globalization of the holidays. Most of these events will sound familiar:

Singles Day, in November, in China, Hong Kong and South Korea

The aforementioned Click Frenzy, in November, in Australia

Black Friday, in November, in the U.S., U.K., France and South Korea

Cyber Monday, in November, in the U.S., U.K., Australia, France and Japan

Green Monday and Super Saturday, in the U.S., in early December

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Short-Term PrognosisThe international shipping competitive landscape will develop in these ways during the next two to five years:

Trading-partner economies will stabilize but short- term demand for U.S. goods will diminish because of a strong dollar.

Canada may be the strongest near-term growth opportunity for major partners in North and South America.

Long-term GDP outlook for Mexico is strong.

Near-term outlook for European trade is improving but likely to weaken over the long haul.

Near-term trade growth with Asia has tapered significantly but remains a strong long-term growth opportunity.

Cross-border eCommerce is projected to grow enormously in the next three years. Cross-border revenue in 2018 is expected to hit $307 billion (up from $105 billion in 2014) and cross-border shoppers are expected to increase by 40 percent in that same time span1.

The preference for deferred service will continue for several years.

Competitor acceptance of market realities will prompt strategies to balance networks, manage costs, exploit trade with Canada and Mexico and optimize position for deferred services demand.

Efforts to expand free trade agreements, improved trade credit and stronger trading partner economies will aid U.S. package exports but there will be no near-term improvement.

Four International Shipping Activities to ExpectInternational shippers can expect:

B2C and B2B business to continue growing

Fierce competition among existing international shipping carriers and new market entrants to pressure commercial carriers to modify their global strategies

Commercial carriers to transition more international deferred air volume out of express networks

eCommerce cross-border shipping to continue to out-pace global economic growth

These details serve one, all-encompassing goal: to help ensure that everyone in the international shipping chain – carrier, customer and recipient – has the best possible experience. That ideal objective ensures that the cycle will continue to expand and grow.

The Lesson for U.S. Mailers and ShippersShoppers in the ever-expanding global eCommerce world have made four unambiguous and universal points that affect international mail return behavior:

International consumers are increasingly savvy buyers.

They review international merchandise return policies carefully.

Convenient and simple return options influence their purchasing decisions.

Affordable returns options will contribute to repeat customers.

U.S.-based international mailers must consider and respect these consumer behaviors when selling in the global marketplace.

Customers expect an easy experience from the etailers they choose to do business with.

Providing a simple return procedure pleases customers, expands the frequency of transactions and, ultimately, raises the per-event purchase amount customers elect to spend.

1 Source: The Colography Group, based in Atlanta, GA, delivers research, planning and program development services to businesses and governments worldwide looking for growth opportunities in the global time-definite, or expedited, cargo market. Its suite of proprietary databases is based on information gained from interviews with hundreds of thousands of shippers. Through these interviews, The Colography Group extracts market intelligence clients use to plan their transportation strategies.

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About Neopost USANeopost USA provides mailing, business communications management and shipping hardware and software solutions. For generations, we have worked with our customers to send, receive and connect their customer communications in the most secure, efficient and professional manner possible. As businesses increasingly move to digital communications, we continue to help our customers communicate via physical mail, digital communications and parcels. For more information on Neopost USA, visit www.neopostusa.com.

AuthorsVincent DeAngelis, Vice President, Postal Relations, Neopost USA Krishna Iyer, Director, Marketing, Neopost USA

International Mail Information ResourcesConsult with a licensed customhouse broker who can answer your specific questions about international mail.

Utilize the commodity look-up feature on www.export.gov for explanations of the regulations and restrictions that may affect international mail.

Take advantage of free or low-cost resources available through the Department of Commerce (www.export.gov), the International Trade Administration (www.trade.gov) and U.S. Customs and Border Protection (www.cbp.gov). All three of these information sources provide extensive expertise on exporting from the U.S.

AcknowledgementNeopost USA amalgamated the content of this white paper from a six-part series written by its experts and published in Mailing Systems Technology Magazine throughout 2015.

The State of International Mailing and Shipping

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